S&P 500 Index Hits New Record as U.S. Inflation Slows: The S&P 500 index reached an all-time high as U.S. inflation slows down,
reflecting investors’ confidence in the continued rise of U.S. stocks during the second half of 2024.
Below are the performance details and forecasts for the S&P 500 index and the key sectors influencing it.

Content

S&P 500 Stock Performance

Slowing U.S. Inflation

Recent Performance of S&P 500 Stock
Funds Rush into Technology Stocks

Stock Valuations

Increasing Evidence of Reduced Price Pressures

Data Boosts Rate Cut Bets
Performance of Major Indicators

S&P 500 Stock Performance

U.S. stock indices hit all-time highs, benefiting from the rise in technology stock prices,
while Treasury yields fell amid bets that the Federal Reserve will cut interest rates this year amid signs of slowing inflation.
The stock indices rebounded after a brief decline,
and the S&P 500 index reached an all-time high for the fourth consecutive time, recording its 29th record high this year.
Treasury bonds of all maturities rose, pushing the 10-year bond yield below 4.3%. A $22 billion sale of 30-year debt saw strong demand.
Increased political risks in France pushed the premium on the country’s 10-year bonds to its highest level since 2017 compared to their German counterparts.

Slowing U.S. Inflation

U.S. producer prices unexpectedly fell in May by the largest amount in seven months,
indicating that inflationary pressures are moderating.
Many categories used to calculate the Federal Reserve’s most closely watched inflation gauge,
the Personal Consumption Expenditures (PCE) price index, saw smaller declines in May than the previous month.
Bill Adams of Comerica Bank, who expects the Federal Reserve to cut interest rates in September and December,
said: “The latest available data gradually opens the door for the Federal Reserve to start cutting interest rates later this year.”

Recent Performance of S&P 500 Stock

The S&P 500 index surpassed the 5430-point level to a new high.
Tesla shares jumped after Elon Musk said shareholders supported his compensation package.
Broadcom led the rise in chipmaker stocks after announcing strong earnings and a 10-to-1 stock split.
GameStop shares surged after a post by Keith Gill, also known as “Roaring Kitty,” on X.
The 10-year Treasury bond yield fell eight basis points to 4.24%. Beyond the political tensions in France,
EU bonds took a hit after bets on their imminent inclusion in major sovereign indices failed,
undermining the bloc’s efforts to broaden the appeal of its debt.

Funds Rush into Technology Stocks

Fear of missing out on the tech stock rally has spread among active investment funds.
Investment funds have increased their positions in technology stocks
since the beginning of 2024 to capitalize on their rising prices while reducing exposure to all other sectors.
This has pushed the group’s weight to an all-time high, according to data compiled by Barclays strategists.
On the other hand, JPMorgan’s asset management division expects the historically
strong start to the U.S. stock market to extend into the second half of 2024.
While this move may seem more like a challenging journey than a rocket ride after
the S&P 500 index has risen more than 10% since January, strong earnings,
the end of the Federal Reserve’s tightening campaign,
and economic strength will continue to lift U.S. stock indices in the coming months,
according to strategists led by David Kelly, who recommended buying large-cap stocks and a mix of value and growth stocks.

Stock Valuations

Major U.S. stocks appear more expensive compared to bond markets than at any time in the past two decades,
although this may not mean much for stock returns and does not necessarily indicate a bubble,
according to Bloomberg Intelligence strategists led by Gina Martin Adams.
They wrote: “The latest historical precedent shows that relative value is a poor indicator of returns.”
According to Bloomberg Intelligence, stocks spent most of the bull market in
the 1980s and 1990s at worse relative value levels and still posted significant annual growth.
Valuation excesses also appear only through market capitalization weight,
with the equal-weight index approaching pre-pandemic levels and relative valuations of nine of the 11 below-average sectors.

Increasing Evidence of Reduced Price Pressures

Traders have continued to monitor the macroeconomic picture closely.
U.S. producer prices unexpectedly fell in May by the largest amount in seven months,
indicating that inflationary pressures are moderating.
Many categories used to calculate the Federal Reserve’s most closely watched inflation gauge,
the Personal Consumption Expenditures (PCE) price index, saw smaller declines in May than the previous month.
The producer price index data followed a weak consumer price report,
providing some reassurance about progress toward the Federal Reserve’s 2% inflation target.

Data Boosts Rate Cut Bets

U.S. monetary policy officials are expected to cut interest rates only once this year and anticipate more cuts next year,
reinforcing calls by policymakers to keep borrowing costs high for longer to suppress inflation.
The Federal Reserve’s “dot plot” showed that four policymakers did not expect any cuts this year,
while seven expected only one cut and eight anticipated two cuts. Krishna Guha of Evercore said:
“This is still just one month’s data.
The takeaway from the June Federal Reserve meeting is that it will take a more sustained downward
shift over several more months for the Federal Reserve to act on rates.”
He added that this is exactly the type of data Jerome Powell needs to guide the cautious Federal Open Market Committee toward two rate cuts.
The most closely watched inflation index by the Federal Reserve is expected to show the smallest
increase since November after two better-than-expected price reports this week.
Many analysts predict the core PCE price index, due later this month, will rise by only 0.1% in May.
Such numbers would help strengthen the case for two rate cuts this year.

Performance of Major Indicators

The S&P 500 index rose by 0.2% at 4:01 PM New York time.
The Nasdaq 100 index climbed by 0.6%.
Bitcoin fell by 2.1% to $66,632.76.
Ether value dropped by 2% to $3,482.52.
The gold price in spot transactions decreased by 0.9% to $2,303.53 per ounce.

S&P 500 Index Hits New Record as U.S. Inflation Slows

S&#038;P 500 Index Hits New Record as U.S. Inflation Slows

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S&P 500 Index Hits New Record as U.S. Inflation Slows